05.12.2022 - By Rick Girard
We often hear data on how much bad hire costs you and your company. About 3x the person’s annual salary.
But how much did the interview process itself cost?
For a startup to make a hire, the company spends about 73 total hours interviewing. With the most significant cost being 30 hours of the production team's combined time. And this is assuming that 6 people make it through a full interview to get to the hire.
We have to ask ourselves, can we really afford to lose almost 4 days of productive activity to interview? Roughly $9,855 per role, not including candidate marketing or recruiting fees.
As a small business, the answer is NO!
Guest Bio:
Rocky Lalvani of Profit Comes First, serves as Chief Profitability Adviser for business owners. He teaches them how to ensure they get paid and make profit a priority! As a certified Profit First Professional he implements Mike Michalowicz's Profit First System.
Rocky started with nothing when his parents immigrated to the United States when he was two years old, and his parents were in their 40's. It was his parents' second time starting over in life as they moved here to experience the American dream.
In spite of a lot of struggles and his mom passing away when Rocky was 7, he has been able to achieve financial and life success. Rocky loves to share his journey and inspire others to achieve their dreams even faster.
Today we discuss:
Why it is critical to understand what interviewing costs
How to maximize your team's time with structure
Challenges today?
Employees are the major cost for the business
Employee should provide a return for the business
Return of Cost of person (taxes, unemployment)
Inefficiency does not show up anywhere on the p&l
Wealth is built on the balance sheet!
Why is this important to the company?
Costs to the company hiring
Reduces morale
Loose customer
Nobody is tracking interview or training costs
Hard costs that are very difficult to figure out
As a client- doesn't want to do business with a company that hires wrong
(leadership issue)
Rick’s Nuggets
Team time waste!
People who meet the team must be positioned properly
Demonstrate strong leadership in protecting time
How do we solve the problem?
Mission values purpose
This is the step most business owners skip!
Or in their head, but no one else knows
Hire to it
Have to live it
Hire in alignment with mission, values, purpose
Not who you like
Having a interview process
Understanding the real cost
Bad Hire- Employee does not provide any value
Mistakes
Morale for everyone else
Lose clients/ client trust
Example Costco vs. Sam's
Gross profit / Total payroll including taxes
For every $1 in payroll returns x$ in gross profit
Measure & Know
Need to be making at least 2X payroll
It all comes back to leadership!
We change the accounting formula of Sales - Expenses = Profit to Sales - Profit = Expenses. This ensures Profit comes first! (PS. It's not about money at all costs, people come before money!)
Rick’s Nuggets
Values - most important
Protect time costs
Structure interview Each step is a decision
Only progress value aligned, well positioned & accomplished people
Decisions must have evidence to back
Eliminate uncertaintyAssign interview questions
Prepare all for success
Key Takeaways that the Audience can plug into their business today! (Value):
Is mission vision purpose written down & do your employees know it?
Cost of a bad hire for you?
How much profit do your employees bring you?
Guest Links
LinkedIn: https://www.linkedin.com/in/rocky-lalvani/
Company: https://profitcomesfirst.com/
LinkedIn: https://www.linkedin.com/company/profit-comes-first/
Twitter: https://twitter.com/rockylalvani
Facebook: https://www.facebook.com/richersoul/
Instagram: https://www.instagram.com/richer.soul/?hl=en
Blog: http://richersoul.com/
Podcast: https://podcasts.apple.com/us/podcast/profit-answer-man-implementing-the-profit-first-system/id1508245322
Host Links:
LinkedIn: https://www.linkedin.com/in/rick